After years of problems with Textile for WordPress plugins, I think I've solved the problem I've been experiencing.
When using Adam Gessaman's Textile 2.1, options:
* MT Textile
* Smartypants and Texturize enabled
* utf-8 in and out
Textile would work _almost_ perfectly. It would apply textile syntax, it wouldn't touch scripts and WordPress shortcodes, and everything would be dandy. Except for foreign characters, such as æ, ø and å, which would be borked into two-character mumbletext.
I managed to fix this problem.
Textile2.php from the plugin file, I commented out line 1345, that said
$text = $this->encode_html($text);. That, it seems, was enough to fix all my troubles. In other words,
$text = $this->encode_html($text);
// $text = $this->encode_html($text);
I hope this is helpful to others, and that commenting out that line didn't break anything else.